AMD 2010 Annual Report Download - page 93

date of conversion. The Class B Notes will automatically convert into GF Class B Preferred Shares upon the
earlier of (i) an IPO, (ii) certain change of control transactions of GF or (iii) the close of business on the business
day immediately preceding the maturity date.
Based on the structure of the transaction, pursuant to the guidance on accounting for interests in variable
interest entities, during 2009, GF was considered to be a variable interest entity of the Company and the
Company was deemed to be the primary beneficiary. Therefore, the Company was required to consolidate the
accounts of GF from March 2, 2009 through December 26, 2009. For this period, ATIC’s noncontrolling interest,
represented by its equity interests in GF, was presented outside of stockholders’ equity in the Company’s
consolidated balance sheet due to ATIC’s right to put those securities back to the Company in the event of a
change of control of AMD during the two years following the Closing. The Company’s net income attributable to
its common stockholders per share consisted of its consolidated net income, as adjusted for (i) the portion of
GF’s losses attributable to ATIC, which is based on ATIC’s proportional ownership interest in GF’s Class A
Preferred Shares (17% in 2009), and (ii) the non-cash accretion on GF’s Class B Preferred Shares attributable to
the Company, based on its proportional ownership interest of GF’s Class A Preferred Shares (83% in 2009).
At the Closing, AMD, ATIC and GF also entered into a Shareholders’ Agreement (the Shareholders’
Agreement), a Funding Agreement (the Funding Agreement), and a Wafer Supply Agreement (the Wafer Supply
Agreement), certain terms of which are summarized below.
Shareholders’ Agreement. The Shareholders’ Agreement sets forth the rights and obligations of AMD and
ATIC as shareholders of GF. The initial GF board of directors (GF Board) consisted of eight directors, and AMD
and ATIC each designated four directors. After the Reconciliation Event (discussed above), the number of
directors a GF shareholder may designate increases or decreases according to the percentage of GF’s shares it
owns on a fully diluted basis. The Company had the right to designate three directors to the GF Board as of
December 26, 2009. Pursuant to the Shareholders’ Agreement, if a change of control of AMD occurs within two
years of Closing, ATIC will have the right to put any or all GF securities (valued at their fair market value) held
by ATIC and its permitted transferees to the Company in exchange for cash. In addition, if a change of control of
AMD occurs after the Reconciliation Event, ATIC will have the option to purchase in cash any or all of the GF
securities (valued at their fair market value) held by the Company and its permitted transferees, ATIC can require
us or the other party to the change in control transaction to assume a pro-rata portion of ATIC’s funding
commitment under the Funding Agreement until 2013, and ATIC can require the other party to the change in
control transaction to guarantee all of our obligations under the transaction documents.
Funding Agreement. The Funding Agreement provides for the funding of GF and governs the terms and
conditions under which ATIC is obligated to provide such funding. Pursuant to the Funding Agreement, ATIC
has committed to additional equity funding of a minimum of $3.6 billion and up to $6.0 billion to be provided in
phases over five years from the Closing. The aggregate amount of equity funding to be provided by the
shareholders in any year depends on the time period of such funding and the amounts set forth in the five-year
capital plan of GF. In addition, GF is required to obtain specified third-party debt in any given year, as set forth
in its five-year capital plan. To the extent that GF obtains more than the specified amount of third-party debt,
ATIC is able to reduce its funding commitment accordingly. The Company has the right, but not the obligation,
to provide additional future capital to GF in an amount pro rata to its interest in the fully converted Ordinary
Shares of GF. To the extent the Company chooses not to participate in an equity financing of GF, ATIC is
obligated to purchase its share of GF securities, subject to ATIC’s funding commitments under the Funding
Agreement.
ATIC’s obligations to provide funding are subject to certain conditions, including the accuracy of GF’s
representations and warranties in the Funding Agreement, the absence of a material adverse effect on GF or
AMD and the absence of a material breach or default by GF or AMD under the provisions of any transaction
document. There are additional funding conditions for each of the phases which are set forth in more detail in the
Funding Agreement.
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